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What Cuba Reveals About the Gig Economy

At first blush, Cuba and America bear little resemblance. In spite of numerous reforms, the Castro government remains hermetically sealedand often hostileto its press. As anemic as Americas economic recovery may appear, Cubas poverty is dire and procrustean lineamientos (economic guidelines) preclude its citizens from materially improving their prospects.

Nevertheless, after visiting Cuba, I was struck by our shared challenges. On both sides of the Florida Straits citizens voice concerns about political morass, atrophying infrastructure, and the grim job market that awaits millennials. The key difference, to my eyes, is that those problems are much exacerbated in Cuba.

If Cuba offers an exaggeration of domestic political and economic challenges, it also models the effects one elixir, the web-enabled sharing economy, has when vigorously imbibed. Far from a panacea, this contingent economycall it sharing, gig, or freelancepresents a state-subsidized liability and a cautionary tale for defenders, especially those wary of government intervention.

Cubas Sharing Economy A communist island nation would seem fertile terrain for the sharing economy. Well before the availability of Internet cafes and Wi-Fi hotspots, Cubans shared cars, kitchens, and homes.

In the early 1990s, Cuban authorities established markets for casas particulares, private rental homes, and paladares, family-run kitchens. A traditional hotel can cost upwards of 200 or 300 CUC ($200 to $300) per night in Central Havana; I rented rooms in a casa particularfor 20 or 30 CUC per night. A restaurant meal in Old Havana can set you back 20 CUC, compared to 2 or 3 CUC at a nearby paladar.

While you can spot official taxis across Havana, you can also hitch rides with nearly any vehicle. Theres a well-developed custom through which passengers share vehicles for a flat rate of 1 CUC per rider. With limited public transit and low car ownership, many Cubans rely upon ride-sharing as their primary mode of transportation.

All of this is to say that kitchen-, home-, and ride-sharing arose in Cuba independently of web start-ups such as Meal Sharing, Airbnb, and Uber.

On its face, web tech simply bolsters this sharing economy. Yondainer Gutierrez launched the Yelp-like AlaMesa to help locals and visitors find great Cuban food. The Android app and website have steered more trafficand more varied trafficto paladares. Airbnb is a game-changer for American tourists to Cuba. Because Airbnb can deposit greenbacks directly into Cuban hosts bank accounts, US visitors can purchase rooms at casas particulares before arriving in Cuba. According to Airbnb representatives, approximately 4,000 of the estimated 8,000 casa particulares list on Airbnb.

Infrastructure Obstacles The problem for these web tech ventures is that they presuppose infrastructure that doesnt exist. Cubas web access is exceedingly poor. Aside from so-called admins (government officials, journalists, academics, and the like), Cubans cannot access the Internet from their homes. While the government released a proposal for residential broadband, the narrow scope of the projecta pilot in Old Havanameans that most Cubans will continue to rely upon Internet cafes and Wi-Fi-enabled parks, where access remains expensive (2 CUC per hour) and unreliable.

I stayed at two casas particulares in Havana: Both were in proximity of a Wi-Fi hotspot, both hosts owned Wi-Fi repeaters, and both hosts complained that they couldnt get online after 10 am because there were too many simultaneous connections.

If you cannot connect to the Internet, you cannot participate in a web-enabled marketplace. When one of my hosts could not connect to the Internet for three days, she lost her Airbnb reservations and had her account suspended. Inadequate broadband takes an even greater toll on web entrepreneurs: one start-up founder explained how she plans her workload around her 56Kbps connection; another said he left his office to connect to a Wi-Fi hotspot to update websites. Despite the palliative effects of web toolsnearly everyone relies upon a low-bandwidth app called Imo to make international phone callsapps alone cannot solve Cubas infrastructural woes.

Cuba has bigger problems than poor broadband access. One of the reasons so many Cubans share their cars and open their kitchens and homes isnt because they want to connect or share experiences, in the parlance of Silicon Valley start-ups; its because theyre desperate for money.

As Bernardo Romero, founder of tech start-up Ingenius, explained: Cuba has two parallel economies: one with the state and one with private business. State employment, while ubiquitous, doesnt pay a living wage, which forces individuals to share what they have and freelance wherever possible.

Subsidizing the Gig Economy Make no mistake, whether guaranteeing income through Social Work assignments or providing higher education and healthcare, the Cuba state subsidizes the gig economy.

Tomas Bilbao, managing director at Avila Strategies, frames the status quo in terms of return on investment: the state invests in its populations human capital and it should expect a better return. As it stands, many of the thousands of engineers whograduate annually cannot find work, and those skills go unused. As Bilbao puts it, A cab driver shouldnt be a former nuclear engineer.

From the perspective of the state, PhD-equipped cab drivers arent the worst outcome. Hiram Centelles, cofounder of the popular Cuban classified platform Revolico, sees a deluge of listings by private companies specializing in outsourcing. These intermediaries, often based in Miami, pay computer science graduates the equivalent of a few hundred dollars per month to code for international firms. Meanwhile, Cuban business owners often incorporate elsewhere. For his part, Centelles emigrated to Madrid. Now he collects revenue, spends money, and pays taxes in Spain. While these outcomes serve individual interests, they are far from ideal for the state.

I have no interest in advocating for the Cuban state save to say that it provides a safety net upon which most Cubans rely. Without universal higher education, Cubans would lack skills to freelance for international firms. Without state-based employment, they would lose reliable, if limited, incomes that subsidize freelance activities.